SUMMARY: Though some initial research seems to indicate consumers are unwilling to pay for news, deeper analysis shows otherwise. Perceived value of content, as well as overall marketing strategy, should ultimately dictate any paywall decision.

Listen carefully when deciding strategy for paid content

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Findings from a March 2011 survey of U.S. adults by Harris Interactive conclude: “Interestingly, while online paywalls are becoming more common, fewer people say they would be willing to pay to read content online now than said so in late 2009 — 20% say they would be willing to pay for a daily newspaper’s content online today, compared to 23% who said so in December 2009.”

Run for the hills. I can hear Ronald Reagan’s confident voice urging, “Newspapers, tear down this paywall!”

Here we are, truth-seeking newspapers, listening to the propaganda and quaking in our boots. Before we give up out of fear of failure, evaluate the death knells with heightened analytic filters.

First, why would you ask a general sample of Americans if they would be willing to pay for content online? Other Harris Interactive research states that only 2 in 5 Americans read a newspaper daily, and 81% read one monthly. I would imagine the proportion of print readers actually paying a meaningful amount is far lower. The “willingness to pay” question should only be asked of regular, paying newspaper readers.

Muddying the analysis with the downward trend of newspaper readership in general misdirects our concern with general newspaper readership health inappropriately onto the viability of a paid digital channel.

Second, we should not confuse these research firms with strategic consumer product entities. We should be the strategic consumer product entities and realise that you can’t put the entire weight of digital success on the ability of a print document often created for a mass audience to translate to other platforms.

Rather than reactively raising alarm bells that paid digital content doesn’t work, we need to be thinking about the strategic development of our businesses. Across the world of commerce, digital or not, people are willing to pay more for highly targeted and relevant products or services with a high perception of value.

With that in mind, instead let’s listen to these voices:

Pew Research Center reports, “Local news is going mobile. Nearly half of all American adults (47%) report that they get at least some local news and information on their cell phone or tablet computer… . At the moment, few people pay for news online. One question in the news industry is whether the willingness to pay for online content would grow if people faced the prospect of their local media not surviving otherwise. Pressed on the value of online access to their local newspaper, 23% of survey respondents say they would pay US$5 a month to get full access to local newspaper content online. When asked if they would pay US$10 per month, 18% of adults say yes. Both figures are substantially higher than the percentage of adults (5%) who currently pay for online local news content. Nonetheless, roughly three-quarters say they would not pay anything.”

While balanced and not all rosy, the Pew analysis provides insights that can help us think in terms of growth opportunities and positive change, rather than dismissing outright the prospects of charging for digital content.

And I’ll close with a real voice of reason from Seth Godin’s Blog: “Free is a valid marketing strategy. In fact, it’s almost impossible for an idea to have mass impact without some sort of free (TV, radio, Web pages, online videos ... they’re all free). At the same time, it’s not clear to me that cheaper content outperforms expensive in many areas.

“As the marginal cost of delivering content drops to zero (all digital content meets this definition), I think there are valid marketing reasons to do the opposite of what economists expect. Free gets you mass. Free, though, isn’t always the price that will help you achieve your goals. Price is often a signalling mechanism, and perhaps nowhere more than in the area of content. Free enables your idea to spread; price, on the other hand, signals individuals and often ends up putting your idea in the right place. Mass shouldn’t always be the goal. Impact may matter more.”